ou have a 50 percent chance of making $0, a 40 percent chance of making $100, and a 10 percent chance of losing $100. Calculate the expected value and variance of the payoff.
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You have a 50 percent chance of making $0, a 40 percent chance of making $100, and a 10 percent chance of losing $100. Calculate the expected value and variance of the payoff.
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- You take a position with a large real estate development company as your first job after graduation. Your first big assignment is to sell an office building – you have been informed the company’s cost into the building (and the bottom line price it is willing to accept) is $400,000. You have identified a likely buyer and you assess that his top price is either $500,000 with a probability of .3, $600,000 with a probability of .5, or $1,000,000 with a probability of .2. You have to commit to a posted price – what price will maximize your profitability?Five of ten people earn $0, four earn $100, and one loses $100. What is the expected payoff? What is the variance of the payoff?In a final round of a MegaMillion TV show, a contestant has won $1 millionand has a chance of doubling the reward. If he loses his winnings drop to$500,000. The contestant thinks his chances of winning are 50%. Should heplay? What is the lowest probability of a correct guess that will make his betprofitable? Show work
- In a final round of a MegaMillion TV show a contestant has a won $1 million and has a chance of doubling the reward. If he loses his winnings drop to $500,000. The contestant thinks his chances of winning is 50%. Should he play? What is the lowest probability of a correct guess that will make his betprofitable? Please show your work.A wheel of fortune in a gambling casino has 54 different slots in which the wheel pointer can stop. Four of the 54 slots contain the number 9. For $3 bet on hitting a 9, if he or she succeeds, the gambler wins $16 plus return of the $3 bet. What is the expected value of this gambling game? (Present your answer in dollars with 2 decimal places but without $ sign)A wheel of fortune in a gambling casino has 54 different slots in which the wheel pointer can stop. Four of the 54 slots contain the number 9. For a 1 dollar bet on hitting a 9, if he or she succeeds, the gambler wins 10 dollars plus the return of the 1 dollar bet. What is the expected value of this gambling game? What is the meaning of the expected value result?
- In a game, there are three values 1, 000, 2.500 and 5,000 and the cost of the game is 1, 500 . If each outcome has an equal probability of occurring, then what is the expected value of playing the game?A Bank has foreclosed on a home mortgage and is selling the house at auction. There are two bidders for the house, Zeke and Heidi. The bank does not know the willingness to pay of these three bidders for the house, but on the basis of its previous experience, the bank believes that each of these bidders has a probability of 1/3 of valuing it at $800,000, a probability of 1/3 of valuing at $600,000, and a probability of 1/3 of valuing it at $300,000. The bank believes that these probabilities are independent among buyers. If the bank sells the house by means of a second- bidder, sealed-bid auction, what will be the bank’s expected revenue from the sale? The answer is 455, 556. Please show the steps in details thank you!Consider two local banks. Bank A has 100 loans outstanding, each for $0.9 million, that it expects will be repaid today. Each loan has a 7% probability of default, in which case the bank is not repaid anything. The chance of default is independent across all the loans. Bank B has only one loan of $90 million outstanding, which it also expects will be repaid today. It also has a 7% probability of not being repaid. Calculate the following: a. The expected overall payoff of each bank. b. The standard deviation of the overall payoff of each bank.
- How much is his risk on any random day due to late arrival?Portsmouth Bank has foreclosed on a home mortgage and is selling the house at auction. There are three bidders for the house, Emily, Anna, and Olga. Portsmouth Bank does not know the willingness to pay of these three bidders for the house, but on the basis of its previous experience, the bank believes that each of these bidders has a probability of 1/3 of valuing it at $600,000, a probability of 1/3 of valuing at $500,000, and a probability of 1/3 of valuing it at $200,000. Portsmouth Bank believes that these probabilities are independent among buyers. If Portsmouth Bank sells the house by means of a second- bidder, sealed- bid auction (Vicktey auction), what will be the bank's expected revenue from the sale?You're a contestant on a TV game show. In the final round of the game, if contestants answer a question correctly, they will increase their current winnings of $3 million to $4 million. If they are wrong, their prize is decreased to $2,250,000. You believe you have a 25% chance of answering the question correctly. Ignoring your current winnings, your expected payoff from playing the final round of the game show is. Given that this is ______________ (POSITIVE/NEGATIVE), you___________ (SHOULD/ SHOULD NOT) play the final round of the game. (Hint: Enter a negative sign if the expected payoff is negative.) The lowest probability of a correct guess that would make the guessing in the final round profitable (in expected value) is (Hint: At what probability does playing the final round yield an expected value of zero?)